The current agreement is not working in N Ireland and clearly needs to be revisited. The EC is refusing to extend the existing period of grace for this to be done. I don't believe the EC fully understands the sectarian tensions building up there, or in the case of Mairead McGuinness I don't believe she wants to understand. Continuing to withhold the grant of equivalence to the UK's financial services because of this seems like a strange tit-for-tat response as there is no connection whatsoever between the two things.
For anyone with a knowledge of the fragile political balance on the Island of Ireland it's very clear that the implementation of the new rules will inevitably result in violence and bloodshed. It seems that the EC's vice president, Maroš Šefčovič has blocked the UK's moves to extend the grace period while the matter is discussed further.
I'm not sure there is a solution to the Irish problem. There never was. But it would be better to discuss matters further rather than risk violence. Retaining the status quo until October and re-negotiating that part of the agreement would seem to be the sensible solution, but sensible doesn't appear to feature much in the EC's plans.